The tumble occurred shortly after bitcoin hit a record high of $69,325.
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Bitcoin took 10 minutes to return to parity with euro trading pairs on other exchanges.
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Flash crashes are typically attributed to a lack of liquidity or a “fat finger” trade.
BTC momentarily plunged to €48,529 from €60,000 on Coinbase, while on Kraken, for instance, the price only went as low as €58,400. The reason for the flash crash remains unclear and it took 10 minutes for the price to rebound back to parity with other exchanges.
Flash crashes can typically be attributed to a few scenarios, one of which is a lack of liquidity, i.e., the amount of market sell orders was too high for the amount of resting buy orders on the order book and the price thus needed to sink to the nearest point of adequate bids.
Another reason, as seen during a flash crash on Binance.US in 2021, is a bug or mistake made by a trader or algorithm, often called a “fat finger” trade.
The disparity between euro trading pairs occurred shortly after bitcoin surged to a new record high in U.S. dollar terms of $69,325 and within minutes reversed those gains, sliding to below $64,000 at one point.
Why did the Crypto Market Crash? What Next For Bitcoin and other coins?
Catching up on a wild Tuesday market, Bitcoin price reached a peak of $69,324 and soon afterwards, dropped down by 10% resulting in a $1Billion sell-off. While Bitcoin has remained the king of all cryptocurrencies since 2011, recently many analysts are predicting the Bitcoin era to be soon taken over by altcoin season.
Bitcoin Rises Past $69K and Tumbles 10%
On Tuesday, Bitcoin crossed its previous ATH and surged to $69,324. However, almost immediately, the Binance order book showed huge sell orders. With a massive number of traders lined up to make profits, sell orders worth 300 Bitcoins amounting to $20 million at $69,000 and 500 Bitcoins at $70,000 resulted in an immediate drop sending the BTC Price level below $60K in one strike.
Once Bitcoin passed $69K and reached $69,324, it resulted in an intense selling pressure causing Bitcoin to fall over $1,000 in just a minute. The subsequent sell-off waves pushed the price further down, hitting a low of $59,700.
Despite the volatility, Bitcoin managed to rebound to $62,800. The pullback resulted in a 7% decline over the past 24 hours.
Also, the volatility resulted in liquidations worth $1.1 billion of derivatives trading positions across various digital assets within 24 hours. Of the total liquidations, $870 million were attributed to long positions, emphasizing the impact of the sudden market downturn on leveraged traders.
Bitcoin-Influenced Market Crash
The Bitcoin crash further resulted in the price crash of meme coins like Dogecoin, Shiba Inu, and others which raised concerns about the speculative nature of these assets. Trader @Cryptomanran advised, “Memes are an amazing trade but remember to take profits kids and put them into protocols that will make a difference in 5 years!”
On the other hand, quality altcoins with strong fundamentals, such as Ethereum and Solana, showed resilience. Ethereum’s upcoming Dencun upgrade and Solana’s competitive gas fees position them as survivors in the bloody Bitcoin crash which affected altcoins and meme coins.
